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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger hearing, and on this edition, a final bump up for US share markets at the end of a week of turmoil over tariffs.
While the tariffs made trade between the US and China virtually impossible, a former Trump adviser tells us it's part of the plan to put pressure on an economic enemy.
China is by far the worst trading partner in terms of countries out there where where you see our small companies inventing products that then show up on Alibaba and then the small companies can't take any Chinese companies to court.
Also today an agreement reached after almost 10 years to try to reduce polluting emissions from global shipping.
The UK Parliament is recalled to allow government to control a Chinese owned company, British Steel.
And as Gabon gets ready to elect a new president following a military coup, can the Gabonese economy diversify away from oil?
But first, the end of another week of strained faces and fast moves on Wall Street as investors struggle to keep up with the changing tariff policies from the White House.
Big falls at the start of the week, followed by record surges on Wednesday, where most of the tariffs were suspended followed by red across the screens again on Thursday as the realization of the economic damage set in.
So how was Friday? Joining me now is Emily Peck, Markets Correspondent at Axios.
Emily thanks for being with us today.
It was in the end I think I'm right in saying, a bit of a tick -up.
Yeah great to be here Roger.
It was a bit of a tick -up on Friday and the S &P 500, the closely watched stock index here in the U .S. actually wound up up five point six percent for the week and all and the Dow and NASDAQ also closed up.
The real worry right now lies in the bond market.
Well yeah we're going to that in just a moment I wonder whether what was going on with the share markets was to do with actually something that the Boston Fed Reserve president Susan Collins had said.
She sort of indicated the Fed was prepared to step in.
Yes she did and it was a reassuring message.
The problem is Susan Collins doesn't actually have a vote on the Fed board to decide on rate cuts.
And you know, and it's also not a surprising message.
I mean, the markets did like it.
So that's great. But and but the reality is, of course, the Fed could intervene in the case of market dysfunction, which is what Miss Collins said, much like they did during Covid.
The question now is, is, will they.
And that's just not something Collins has the final say on.
Well, let's move on to what you were talking about just at the beginning there, which is of course, treasuries the US government bonds, I mean, that really has been what seems to disturb people who know about the financial architecture, because us 10 year Treasury yields posted their biggest weekly increase in more than two decades.
Now, I mean, that is significant, isn't it?
Oh, yes, it's very significant.
Typically when there is financial turmoil, global financial turmoil, investors, Russian and buy U .S. treasuries because they're seen as a global safe haven and it's been that way for generations.
But this week, global investors woke up to the possibility that U .S. treasuries are not actually particularly safe and definitely not a haven.
Investors seem to be shedding dollars, shedding treasury.
The value of the dollar also fell this week and has been falling as investors say, wait a second, maybe the US isn't such a consistent economy anymore can't be relied upon.
It's something that people are watching here and worrying about.
Well you can understand why they would be Emily.
Thank you so much for being with us.
Emily Peck their markets correspondent at Axios.
Well whatever you think of the tariff policies there's little doubt about the impact on confidence both on Wall Street and around the US.
University of Michigan surveys of consumers says US consumer sentiment deteriorated sharply in April and 12 month inflation expectations, surged to their highest level since 1981.
Well, I've been speaking to Thomas Phillips, an economist at the University of Chicago and former acting chairman of President Trump's Council of Economic Advisors.
I asked him first how the effective elimination of trade between China and the US could help America's economic prospects.
China is by far the worst trading partner in terms of countries out there.
where you see our small companies inventing products that then show up on Alibaba.
And then the small companies can't take any Chinese companies to court for doing so, et cetera.
So they are not only the trade villain, but also a military adversary who's building up their military by our purchases.
So I think that is a completely different scenario than Europe or Japan, Mexico, Canada, et cetera.
But it's not okay not to have any trade between China and the U .S., is it?
Chinese imports about 1 .5 % relative to our GDP.
So, it's not as big as the press makes it up, the world falling apart.
Again, the US is a very self -reliant country, only about 12 % to 13 % relative to GDP as imports.
But viewed as a cost, what are other costs of finding communism?
We have a military that basically is 3 .5 % of GDP.
So, if we go away from China by going to other countries that are a little bit more expensive but not building up the military to fight us that is not in my view necessarily with a bad thing all right well Thomas what about the markets though because this does matter confidence matters hugely in the way an economy works whether people are willing to lend money for example to the United States and we know what's going on with Treasuries the US sovereign bonds at the moment they are very difficult people People don't want necessarily to lend money to the US government in the way they did.
And that kind of really goes problems to the whole plumbing underlying the US economy, doesn't it?
Well, I think what's crucial here is that the Trump administration gets two or three deals that are very clear in how they're breaking down foreign trade barriers.
Once that happens, I think the markets will see that this could be a force for a greater free trade.
trade, essentially, if US matches lower barriers abroad with other countries, this is a force for free trade among those pair of countries.
And if that sets an example for other countries to see that and the market see that, I think this will turn around.
I think it's also useful to remember that at the same time bond yields are basically rising.
We're saying their inflationary pressure from these tariffs, which I don't really believe, to be honest, because there's such a small share of our economy and inflation affects our economy -wide increases.
You don't get inflation from tariffs, you get potentially increasing prices in certain industries that are tariffed, but then that means that people are spending more money on them and therefore spend less money on something else, and therefore declining prices in other sectors than the tariff ones.
So I think people are misperceiving this as being inflationary, but if they do misperceive it as being inflationary, higher yields are very natural.
Okay, what about uncertainty, though?
Because that seems to be at the core of what is really roiling the markets at the moment, just not knowing what's going to happen.
Donald Trump announces massive tariffs, and then he suddenly announces a 90 -day pause.
And it's been the way it seems also with the tariffs on Canada and Mexico.
They were on, they were off, people don't know.
Isn't that in and of itself a big problem for markets and therefore for the economy?
Yeah, they could do it a little bit more orderly, but there's clearly a trade -off between strategic uncertainty in negotiations.
You don't want to reveal exactly what you're going to do, because then you don't have any leverage left in the negotiation.
But obviously, the markets hate that uncertainty, right?
So there's a trade off there with uncertainty is good for US negotiations, but bad for markets.
And I think that's some of what you're seeing, in the past, as well as going forward. So what you're saying is, hang on, it's all going to be fun, pretty much what Donald Trump's been saying, don't get worried, it'll all come right in the end?
I think it's important they demonstrate that it can be a force for free trade with initial deals with these countries that are on the table and then basically show markets that this could be a force towards a better opening up of U .S. markets, which will certainly raise U .S. equities, if that's perceived to go forward without the countries banging on the door.
Thomas Philipson there.
You're with the World Business Report from the BBC World.
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Now Saturday in the UK is going to see something highly unusual.
An emergency recall of parliament, where members had already departed for their Easter break.
But what they are being recalled to do is to pass a law that takes control of a Chinese owned British Steel.
The company's been in difficulties.
Their plant at Scunthorpe in Eastern England has been threatened with closure, reducing the country's already shrunken steel -making capacity.
Well I've been speaking about all this to the BBC's business correspondent, Zoe Conway.
So first, what are UK MPs expecting to do?
What this Bill is seeking to do is to give the government the power to direct the leadership of the company of British Steel, owned by Jingye in China, to keep in essence the blast furnace is going, which is where the primary iron steel is made and to keep those fires burning.
In effect Zoe this is nationalisation, isn't it?
No, I don't think it is.
This is about stepping in and making sure that those blast furnaces keep going, that there's enough coal.
I mean, it's extraordinary, the detail that we know in terms of what's in the bill, that the government is actually going to be able to go and buy the coal to put into these blast furnaces and that if any workers who are trying to keep the blast furnaces running were to be sacked by the Chinese ownership for doing so, the government can reinstate them.
Now the reason why I say it's not nationalization, that is certainly not what the government's calling it, I think that would require a completely different intervention from parliament at a later stage.
I don't think the government, to be honest, has quite worked out what it wants to do yet.
Is there a way to run this company without actually owning it.
Do you want to really be taking on debt.
We understand that British Steel is losing seven hundred thousand pounds a day.
I think the government has got a difficult decision here about making sure that this plant keeps going but also to protect the taxpayer.
It seems extraordinary though that the government can effectively tell a company a privately own company, you've got to keep doing business whether you want to or not and we can control how you do it.
I mean it's only a little bit short of now taking over entirely, isn't it?
I think what has really come to a head in recent days is this sense that this virgin steel, this primary steel which is needed for our railways.
We know British Heathrow has just purchased it recently, is using that steel.
That there's a sense that the economic interest of this country requires us to have this this steel and I think this kind of sense that we can't trust this company to run it properly and so we're going to have to do it ourselves and there's been a lot of political pressure to make sure that if the economy is going to grow and we need steel that it's our steel, British steel, that is driving that economic growth but what about the company itself the Chinese company have they responded to this I they must be I would imagine not very happy well they're not responding at the moment.
What they've been saying to me this week is a billion pounds of Jing A's money went into this company.
We're losing huge amounts of money and we put forward a two billion pound business plan to modernize the plant to convert it to what's called an electric arc furnace which is much more environmentally friendly, it lowers carbon emissions, and that was going to cost 2 billion pounds.
And they say that they were expecting the government to put in a billion pounds.
And I think they think there's been some kind of backing down by the government.
The negotiations have been difficult.
British Steel is Jingye's first subsidiary outside China.
They've been negotiating across time zones.
There's been a language barrier, things have gone through translation.
But I think more than that, at its heart, there's been a real breakdown in trust. Zoe Conway there.
Now, it's taken almost 10 years to negotiate, but the world now has an agreement on how to reduce emissions by ships.
The talks at the International Maritime Organization concluded with a vote, with some major nations voting against the deal.
But it did still pass.
Small island states and environmental groups have called the deal unfit for purpose.
They say it doesn't go far enough.
The idea is that ship owners will use less carbon intensive fuels or face a penalty with the system beginning in 2028.
So I asked the IMO's secretary general, Arsenio Dominguez, to explain how it works.
Shipping companies once the agreement is adopted in October, then the agreement enters into force in 2027.
And from then, the ships will have to notified in the report, the emissions emitted during the operations annually in relation to the fuels that they use, then the calculation takes place in relation to the fuels that they use into what will be the payments of the contributions that it will be required to pay.
So they need to have less carbon intensive fuel mix.
Or if they don't, they pay for that in effect.
That's correct. The higher emissions, the more that you pay.
And of course, that also incentivizes the production of new zero in near zero fuels for the transition.
But what about the people who were opposed?
It's very interesting that actually this had to go through on a vote because major producers oil and other nations Saudi Arabia, Russia, UAE voted against this United States didn't participate at all.
I mean, do you actually think this is going to work?
Yes, it is going to work because the world was worked in relation to bringing all the parties together through consensus.
And right now I take on board all the comments and the concerns that have been expressed, and this gives us even more time to engage between now and the adoption.
And of course it's important to highlight that the regulations that I am on are applicable to the ships themselves and not to the countries.
But what about a better system surely would have been to apply a blanket carbon tax or levy.
That would have been a better way to do it, and one that might actually make a real difference.
We have several proposals on the table.
The levy was one of those and of course there was an impact assessment that was carried out on what would it mean of introducing a proposal.
We actually went through an exercise of combining and tested 20 different scenarios and from there, there were several concerns from depending on geographically where they are located, the type of cargo, the type of ships and the last thing that we want is to introduce measures that yes, they are going to help the organisation meet their environmental goals and objectives.
But at the same time, they do not cause any negative impact on state or that is going to have a negative impact on trade.
And within the normal people like you and I and your listeners that will end up paying the price.
But you yourself are not going to meet through this your own targets.
I mean, the IMO target agreed two years ago to cut emissions by 20 percent by the end of the decade.
and the maritime consultancy UMass says this plan that you guys have put together now could achieve an eight percent reduction, so that's not 20 % is it?
We are not working in isolation, even before we adopted the greenhouse gas strategy back in 2023 we started to introduce measures to enhance the energy efficiency of ships in 2011, after 2018 where we adopted the initial strategy we introduced operational and technical measures that are also incentivizing and increasing the The US delegation, which pulled out of the talks on Tuesday night, said that the money that was raised through this, the penalties, they're saying that levy's going to cause inflation.
And they would threaten reciprocal measures.
They sent a letter to that effect to all countries at the IMO.
So the rug is already being pulled out from under this.
And we work with all the member states of the organisation.
This is the beauty of multilateralism, is to engage and carry out the necessary analysis in order to address that and that's what I am continues to look into is regulatory process that is evolved.
It's also the reason why we carried out this impact assessment to see what would be the impact of any of those measures and the combination measures and of course we seen the structure and the guidance that we will be developing later on at the distribution of these revenues with the initial stage that we need to support the member state and in particular developing countries and least developed countries that are the ones that are more at risk with the climate change.
And that was IMO Secretary -General Arsenio Domingo speaking to me earlier.
Now West Africa has in the last few years seen a number of coups that have replaced civilian governments with military hunters.
Often the soldiers promise elections but one state Gabon is actually going ahead with a vote on Saturday.
The last President Ali Bongo was overthrown in August 2023, and now the people there have a choice of eight candidates, including the junta leader Bryce Oligui and Guema and have been lively rallies on the campaign trail.
Some of the noise from the campaign there in Gabon, but what's on voters minds as they prepare to vote for a new head of state.
My view of the election is that we are merely seeing the same thing as during the previous regime.
It really is monotonous.
The same things we experienced in the past are the things we are seeing today.
It seems like a mere change of names, with the same characters playing.
We must have decentralisation through the provinces in the districts and in the counties.
That is what we call developing a country.
But if President Oleg Guy Ngoema does this, he will always have the support of the Papal people because that is what the Papal people expect of him.
When there is decentralisation, he will always have to create jobs.
So how far is the economy the key issue for the people of what is an oil rich nation but has lots of poverty?
Also it's a country recovering after more than five decades of rule by one family, the Bongos.
BBC Africa's Paul M.
Gee is in the capital, Libreville.
Basically, the young people in this country are speaking about the lack of opportunities, the lack of jobs, which is a very big deal.
Close to 40 per cent of young people here are unemployed.
They feel that the political elite are not looking into the economic realities of the country to ensure that there is some progress.
But Paul, the economic reality is it's a fairly small population and an awful lot of oil wealth.
So how come the opportunities for people are so small?
People are complaining that for over five decades the resources of the country have been mostly controlled by the political elite.
Especially the Bongo dynasty, that's what they're saying.
That this regime, which was replete with allegations of corruption, of embezzlement, and financial misappropriation, that they have reaped the population of the benefits of their natural resources, of the oil that they've been blessed with.
And they feel that if there is equitable distribution of the country's wealth, Everybody is going to feel, you know, a little bit of the benefits that could arise from the natural resources of this country.
What about the other areas that the country could develop?
You mentioned agriculture.
I suppose it's a coastal country.
Fishing, perhaps? Even tourism?
Could these sectors really be built up?
The country is really blessed with different resources.
There's also manganese, which they could tap into those potentials.
People really believe that there's need for someone who understands these realities in the country.
They say that those who are running, a good number of them were part of the old system, so there's really nothing new that they could bring to the country in terms of economic prosperity.
But the candidates themselves are saying that they are the ones for the job and that they are going to bring this country to a position where they are going to be envied by other countries.
Now I suppose a lot of what could happen as a result will depend on the outcome of the election, whether it's seen as free and fair, whether people believe that their choice is being respected.
But is there a sense that this is an election which will be free and fair and produce a fair result?
Well, some members of the opposition have said that these elections are not free and fair because the Hunter leader had said that he was going to hand over parts to civilians.
He reneged on that promise and is now saying he's a civilian.
He no longer identifies as a military official.
Some key members of the opposition who are considered to be heavyweights were barred from running because the electoral code brought in a new system of a top age limit.
So people felt that this was an attempt to put aside any formidable opposition Figue who could challenge the military leader in these polls So they say that there is really really nothing to sing now that there is transparency.
There is freedom There is fairness in these elections, but the authorities are saying that it's a level playing field Paul and G in Libreville And China is now the country most tariffed by the US and it's retaliated to the point where trade between the world's two biggest economies is effectively impossible.
But tariffs have been a feature of that trade relationship for a very long time.
During Donald Trump's first term, he hiked tariffs on things like Chinese solar panels, computers, and footwear.
So many manufacturers expanded their operations to neighboring nations like Vietnam and Cambodia.
But that strategy didn't always work out well for a variety of reasons.
Marketplaces China correspondent, Jennifer Pak, explains from the southern Chinese city of Dongguan.
Shoe manufacturing is labour -intensive.
Workers punch every hole, and lace every shoe, by hand, says James Gao, whose company Shoebot owns this factory.
Every lacing is manual, there's no robot.
When local wages get too high, he says, shoe manufacturers like him have to relocate.
That's been the pattern ever since shoemaking started out in the West. By the 1960s he says shoe factories had shifted to Japan and Brazil.
Then Korea and Taiwan.
And for the past three decades the industry has been based largely in mainland China.
Until President Trump's first term when he hiked tariffs on China and China hit back with tariffs on U .S. goods.
So seven years ago more companies started to look at relocating production to Southeast Asia.
Among them Colorado shoe brand Zero, spelled with an X.
We actually looked at Vietnam.
Co -founder Lena Phoenix says, though, the brand didn't make the move to Vietnam because they produced specialized shoes meant to mimic the sensation of being barefoot.
Because we have such a wide range of styles requiring different technical capabilities, we use a number of different factories.
And those factories are in China because that's where the skilled workforces are.
Phoenix's company is doing business with James Gao's Shoebot.
Shoebot works with small and medium -sized brands.
It also makes shoes in Vietnam, though its operations there are small.
One of the company's clients, Mark Olson, co -owns a Portland shoe startup called Vali.
He says Vietnam may be good for big brands, not niche ones like his that make volleyball shoes for women and girls.
Vietnam is where China was maybe 15 years ago.
But China, he says, has so -called industrial clusters with everything you need for shoes, from raw materials to foam manufacturers, knitwear, lacing, and embroidery groups.
They're all within driving distance of Chinese shoe factories, he says.
So it's just set up to do it right.
And he says the Chinese factories are innovative.
They find new materials, upgrade machines, and cut down production times.
Manufacturing in China makes it easier to roll out and test different colors for new volleyball shoe styles, says Evolvie's other co -founder, Rick Anguilla.
There's nothing more satisfying than being at one of these tournaments and having our product on display.
And you hear those four words as they pass by.
Oh, those are cute.
He says his company thought about manufacturing in the US, but decided the challenges were too great.
Leyna Fenix of Zero Shoes agrees.
It would take hundreds of millions of dollars of factory investment, the training of a workforce that does not exist, it would take an enormous amount of time.
Vietnam seemed like a more attractive option despite its less skilled workforce, and her company had hoped to shift manufacturing there.
Since Trump increased tariffs on Vietnamese exports by 46 % last week, she's been having second thoughts.
One of the things that's critical for us to know is whether or not these are in fact the final tariffs.
Given all of the changes that have come out of this administration, we are to some extent waiting for the dust to settle.
Leinar Phoenix of Zero Shoes, ending that report from marketplace's Jennifer Pak here on World Business Report.
That's it from us. Have a great weekend.
Bye -bye. greatly impact your future, especially when it comes to your finances.
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